Unlike other countries, Ottawa has been selling off its reserve of gold bullion and coins

The government of Canada has wound down its gold reserves to basically nothing after a multi-year strategy of selling them off in favour of hoarding other countries' currencies instead.

According to the Department of Finance's official international reserves data released Thursday, Canada's gold reserves were down effectively to $0 as of the end of February. That's the value that Ottawa assigns its gold holdings from an accounting perspective.

In fact, Ottawa still has 77 ounces of gold, worth about $130,000 Canadian at current market prices. All of that consists of gold coins, as opposed to large bullion bricks that the government once hoarded.

The price of gold surged to its highest level in more than a year on Friday at $1,274.70 US an ounce.

Ottawa's gold holdings peaked in the 1960s at more than 1,000 tonnes. But the government has been steadily selling off its gold holdings ever since. By 2003, Ottawa was down to 3.4 tonnes, which it has now almost entirely sold.

Figures show Canada sold 41,106 ounces of gold coins in December and another 32,860 ounces of gold coins in January. Last month, the government sold off another 21,851 in February.

"The decision to sell the gold was not tied to a specific gold price, and sales are being conducted over a long period and in a controlled manner," Finance Department spokesman David Barnabe wrote in a recent email to CBC News.

"The government has a long-standing policy of diversifying its portfolio by selling physical commodities (such as gold) and instead investing in financial assets that are easily tradable and that have deep markets of buyers and sellers," he said.

The final 77 ounces may in fact already be sold, but we won't know that until the monthly reserve figures come out for March in early April.

The figures don't say which coins Ottawa has been selling. The Royal Canadian Mint has produced pure Maple Leaf gold coins in a variety of denominations for more than 40 years. They've proven to be popular around the world, with more than 25 million troy ounces of coins sold since 1979. It also produces gold coins for collectors, along with gold bars and wafers.

Canada produced $5 and $10 gold coins in the 1912-1914 period, too. The mint began to sell off its stash of that vintage gold in 2012 and ended that program in early 2014, selling 30,000 high-quality vintage coins containing 13,000 ounces of gold. The remaining lower-quality vintage coins were all refined so the government could sell the balance as gold bullion.

Former senior Finance Department bureaucrat Don Drummond says he doesn't think it makes any sense for Canada to hold any gold, because it hasn't delivered a good rate of return over time and it costs money to store it.

Drummond says that hundreds of years ago, gold symbolized the wealth of a country.

But that's no longer the case, since no major world economies still value their money tied to the gold standard.

Other countries still hoarding

That doesn't mean all governments are selling off their gold hoards, however. Countries such as Russia, India and China are currently bolstering their reserves. Central banks added 336 tonnes to their reserves in the second half of last year, a 25 per cent increase from the previous year, the World Gold Council says.

In February, the U.S. held about 8,133 tonnes of gold, which made up 72 per cent of its reserves. Germany had 3,381 tonnes for 66 per cent of its reserves last month, while Italy and France each held more than 2,400 tonnes — over 60 per cent of their respective reserves.

About the Author

Pete Evans

Senior Writer, CBCNews.ca

Pete Evans is the senior business writer for CBCNews.ca. Prior to coming to the CBC, he had stints at Report on Business, the Financial Post, the Toronto Star, Canadian Business Magazine and elsewhere. Twitter: @p_evans Email: pete.evans@cbc.ca Secure PGP: https://secure.cbc.ca/public-key/Pete-Evans-pub.asc